Vista Commodity Basket Sharply Outperforms GSCI and Bloomberg

The Vista Commodity Basket has sharply outperformed the major commodity indexes since Vista's inception on 4/30/2009.

Below is Vista's normalized (4/30/2009 = 1000) comparative performance as of the close on August 9, 2023.

Continously compounded returns as of 8/9.2023

VISTA= Vista Commodity Basket

BCOM ER = Bloomberg Commodity Excess Return Index

GSCI ER = S&P GSCI Excess Return Commodity Index 

4/30/2009 = 1000 = VISTA inception date.

Sources: Bloomberg.com, SPGlobal.com, Vista Market Research

Let's first note that between 2015 to 2020, commodities went virtually nowhere! This is the period when crude oil was $25 a barrel for THREE years and the April 2020 WTI futures contract closed at a NEGATIVE $47! This was a continuation of negative real interest rates in the US and an extended period of ultra low inflation. Note also that while Vista is up almost 50% on this chart, Bloomberg and GSCI are below their 2009 levels-no net gains in 14 years.

Initiated by Covid supply disruptions and accelerated by Russia's invasion of Ukraine, commodity prices exploded higher. The energy based GSCI 3 year total return = 68%. Still today, commodities are elevated due to the after effects of Covid and the grinding war of Russian aggression. 

Next note that, since inception, the diversified and long-dated Vista basket rose ten times more than the diversified but nearby roll BCOM ER and four times more than the energy based and nearby roll GSCI ER. Finally, while profitability varied, Vista had no declines for the periods noted. 

OUTLOOK

Despite Vista's outperformance, the outlook for commodities, and inflation, is bearish with a caveat. Bearish because the fundamental demographics of aging population has not changed. The caveat is war. If the war of Russian aggression grinds on, or worse, spreads, commodities, especially energy and food, will catapault to new highs.  

Why compare Vista to the Excess Return indexes? Excess Return indexes do not include interest earned from treasury bill collateral and neither does the Vista basket. So-called total return indexes do. The basket and ER indexes only reflect the value of commodity price changes and are therefore comparable. Backup data is available upon request at VistaMktResearch@gmail.com.

© 2023 George Rahal